Blispay card combines 0 percent financing with 2 percent cash back

Blispay is a new credit product that promises an alternative to store cards for those who want to finance large purchases — and earn rewards.

As with any intriguing new product, though, it’s vital to understand how it works and how to use it responsibly.

The basics

Blispay screenshotUsually, if you want get 0 percent financing on large purchases across multiple stores, you’d need to apply for multiple store lines of credit (one at Best Buy for the TV, one at Home Depot for the bathroom fixtures, one at Ashley Furniture for the sofa, etc.).

But Blispay allows you to apply for one card (a Visa issued by First Electronic Bank, Utah) and then always get automatic 0 percent financing for six months on all purchases over $199 (see the screen shot to the right).

Blispay founder Greg Lisiewski says he aims to bring to the brick-and-mortar realm some of the financing flexibility that his former employer (PayPal’s Bill Me Later) brought to the online-shopping realm.

“Big merchants for sure have financing programs,” Lisiewski says. “But Main Street stores, regional stores, service business don’t typically have access to financing as a way to help them move more product. And, on the other side, customers may not always have access to financing at stores they’d otherwise like to shop at.”

If you don’t pay financed purchases off in full within six months, you’ll be charged interest (at 19.99 percent APR), including interest that has accrued from the date of purchase – more on that in a moment. Standard purchases (ie, those under $199) not paid off by the end of the monthly grace period are also subject to a 19.99 percent APR.

All purchases earn 2 percent cash back – which is redeemed automatically as a statement credit each billing cycle.

How to apply

Stores that partner with Blispay will display signage inviting you to apply for the card – which you can do on the spot with your own mobile device. If you’re approved, you’ll immediately get a digital card (the merchant will key in the number manually when you make your purchase). Later, a physical card will be mailed to you. Blispay is also compatible with Apple Pay.

Offering and advertising the service costs merchants nothing beyond the normal costs of processing Visa transactions. However, Lisiewski says Blispay may offer value-added services down the road.

How the interest works

Blispay’s APR is 19.99 percent. That’s higher than the national average (which hovers just above 15 percent), notes Bruce McClary, National Foundation for Credit Counseling spokesman. According to Blispay’s website, the APR is priced between the usual rate on rewards cards and that of financing cards (which tend to have higher APRs).

In any case, McClary says, it’s wise to compare the product’s interest rate to other rates you may qualify for, especially if you intend to carry a balance over a longer period. Check your mailbox for offers. Ask your current bank what it offers. Or use an online soft-pull credit tool to see the APRs available to you.

“You want to make sure you’re saving as much as possible,” McClary says. “Even though we advise people not to roll purchases over into another billing cycle, you still want to make sure you’re getting a card with a competitive interest rate in case you have to for some reason roll the balance over into another month.”

The purchases qualifying for six months of 0 percent financing have a particularly important stipulation: The interest is retroactive, the go-to model among store-financing cards. That means, if you don’t pay off the purchase in six months, you’ll be charged back interest, starting from the purchase date.

Retroactive interest can appear to be a “double whammy” to customers who don’t understand it, McClary says.blispay online experience

“You really have to scrutinize your ability to repay within the interest-free time,” McClary says. “If you can’t, you have to have a contingency plan. What are the dollars and cents when it comes to that retroactive interest you’re now going to have to pay off in addition to whatever principal is left over?”

Blispay’s online experience, Lisiewski says, is designed ensure its interest model catches nobody off guard. In addition to providing guidance to consumers, partner merchants don’t want consumers’ dissatisfaction to recoil on them.

“My big goal is that I don’t want anyone to feel like they were surprised,” Lisiewski says.

When you view your Blispay account online, there are clear demarcations that differentiate standard purchases from those qualifying for 0 percent financing. When you click on your financed purchases, you can see how long is left on the promotion and the remaining balance (see the image to the right).

“My history with these programs has shown me that the vast majority of customers manage these programs well, or they manage them strongly in their favor,” Lisiewski says. “The majority of customers who use Blispay for the financing will, in fact, take advantage of the financing and pay it off in full before we collect any interest or fees. A meaningful but minority group of customers will choose to revolve it, but they won’t do it unknowingly.”

How your payments are applied

One of the most confusing parts of cards with promotional interest rates is how your payments are applied. After all, if a promotional 0 percent rate (with retroactive interest) on a $500 purchase is about to expire in a month, you’d like to think your payment would go toward zeroing that out instead of the $50 balance from last week’s bar tab.

Ever since the CARD ACT went into effect in 2010, issuers are required to earmark payments above the minimum for high-interest balances. The minimum payment is allocated at the issuer’s discretion.

Here’s how it works with Blispay: The minimum payment will go toward fees and interest on your account first and then to your highest-interest balance, Lisiewski says. Anything above the minimum and below the full amount due will be applied as follows:

  • If you have a balance with promotional interest that expires in two months or less, your payment will be routed to that first, Lisiewski says.
  • In other situations, your payment will go first to your higher-interest balances.

The credit limit

Bankcards from major issuers (Citi, Chase, Bank of America et al.) give credit lines that are at the intersection of your credit worthiness and what you’re likely to spend, Lisiewski says. Store card limits, meanwhile, determine your limit based on your creditworthiness and how much you’re willing to spend at that store – so they tend to be lower.

The limits Blispay gives, Lisiewski says, are more in line with those on major banks’ cards. The maximum limit possible is $12,000, but yours will be determined by your credit profile.

While super-prime customers used to $20,000 limits may be let down, “We’re trying to give people a reasonable limit so they’re not surprised when they compare it to their Chase card,” Lisiewski says.”

Credit rating required

Store-financing cards are often considered a leg up for consumers with shaky credit. Blispay isn’t that kind of product.

“It’s definitely for good credit and above,” Lisiewski says. “It’s for a prime audience.”

Should you consider it?

As with all credit decisions, weigh all your options McClary says. If you are looking for financing for a cluster of purchases, all within a short window of time, other cards may give you 0 percent on purchases for the first several months (or year, in some cases) of card ownership. And that interest won’t be retroactive.

Also take an honest look at your repayment habits. Are you the type to constantly carry balances – or who might get consistently zinged by retroactive interest?

“If you really want to be fair to yourself, you should shop around and compare,” McClary says. “Because there still could be a credit card product that could be used for large purchases but with a much lower interest rate, without the prospect of retroactive interest on unpaid balances.”

If you can carefully track your financed purchases, though, Blispay offers something no other bank card currently does – ongoing 0 percent financing for all large purchases. The fact that you have to worry about only one credit pull (instead of multiple pulls at multiple stores) is also compelling. Finally, 2 percent cash back on all purchases is competitive among cash back cards.

For those reasons, Blispay could very well be a good fit for responsible, strategic consumers.

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Why was $411.28 paid in full when $912.50 still has balance remaining?